Philips set-top box orders may go to Prime Electronics
Royal Philips Electronics has indicated that it will contract Prime Electronics & Satellitics Inc (PESI) to produce STBs (set-top boxes) in China, according to Barry Su, president of the Taiwan-based company. PESI, however, is still evaluating whether to accept the order over concerns about the contract price and its production capacity and R&D capabilities, Su said.The company, which already expected to ship two million STBs in 2004, has a backlog of STB orders, Su explained. In addition, its R&D department in Beijing is now fully occupied. Philips would like shipments, which would cover satellite, cable, digital and high-definition TVs and media gateways, to start in the first quarter of 2004.
According to sources, Philips has evaluated the R&D and manufacturing capabilities of other potential contractors, including Wistron, Quanta Display and Zinwell of Taiwan and irasia.com of China. With PESI reluctant to accept the order, Philips is also considering contracting STB production to Taiwan-based Arcadyan Technology, its joint venture with Taiwan-based Accton Technology, sources said. Arcadyan, which produces digital home solutions, data networking devices and embedded PC solutions but lacks expertise in manufacturing STBs, is looking to team up with an experienced manufacturer to grab the order, the sources added. PESI operates five plants in China - one each in Beijing, Chengdu (Sichuan Province) and Dongguan, Shenzhen and Zhuhai (all in Guangdong Province) - with a total workforce of 3,200. The company also makes LNB (low noise block) converters, WLAN equipment and APs (access points).
Contract DRAM module prices for late October drop slightly, SDRAM spot price to rise in Q4
Contract prices for DRAM modules fell by less than 5% for the second half of October, compared to prices for the first half of the month, according to Taiwanese DRAM makers. While contract prices for DDR333 or DDR266 modules range from US$41-43 for the second half of October, DDR400 module contract prices are between US$42 and US$44, according to DRAM makers, adding that the price ranges still leave them room for profit. Although shipments of motherboards and notebooks have hit record highs, demand for DRAM modules has not been as strong due to the great popularity of low-priced PCs, which usually have less memory, according to channel distributors. A relatively high inventory level is another reason behind the weak demand, as major PC brands are holding inventory of about three to four weeks, the distributors said. The recent price jumps in the spot market, mostly seen as a result of a temporary rebound rather than the emergence of real demand, have not served as a driver in the contract market, DRAM makers said. DRAM makers, however, projected strong demand growth in China, citing rising shipments of Intel's 865 chipsets supporting dual-channel DDR memory. Strong demand for DDR400 modules from distributors in China has boosted average prices for DDR400 die to US$4.50 recently from US$4.20 earlier, according to DRAM makers.
Spot prices for 64Mbit (4×16M) SDRAM chips could edge up to US$2 this quarter from around US$1.90 currently, said a memory IC design firm source. This could be driven by the seasonal shipment rise for consumer electronics and communications products while supply for SDRAM is dropping, the source commented. Supply for SDRAM has shrunk as major DRAM makers, including Samsung Electronics and Hynix Semiconductor, have shifted focus to higher ASP (average-selling price) products. The distributors now hold very low inventory, the source said
Asustek to ship 3.3 million motherboards this month
After shipping a record 3.02 million motherboards last month, Asustek Computer expects its October shipments to reach 3.3 million units, according to an internal company estimate. The other three first-tier motherboard makers are also likely to see shipment increases this month.
LCD supply to remain tight next year
Though more fifth- and sixth-generation (5G and 6G) lines will begin volume production, DisplaySearch president Ross Young predicted that global TFT LCD supply will exceed demand by only 5.5% next year, reported the Taiwan-based Economic Daily News. In contrast, supply will fall short of demand by 1.7% this year. Young considered panel supply exceeding demand by such a narrow margin to be tight. He was speaking yesterday at the 2003 Taiwan Business Alliance Conference, which is being held at the Taipei International Convention Center from October 19-22. The head of the Austin, Texas-based market research firm further pointed out that strong demand for panel capacity will come from the LCD TV market, which will grow at a CAGR (compounded annual growth rate) of 88% through 2007, compared to 28% for the LCD monitor market and 16% for the notebook PC market. As a result, many planned next-generation panel production lines are targeted at the LCD TV market. Young also expected market potential for small to medium-size panels to be excellent and pointed out that more third- and 3.5-generation (3G and 3.5G) TFT LCD lines will be turned from large-size into small to medium-size panel production. Following its second-phase structural reform plan announced in May, Sony plans to completely stop CRT TV production in Japan by mid-2004, reported the Nihon Keizai Shimbun. The company's two CRT TV factories in Inazawa, Aichi Prefecture and Mizunami, Gifu Prefecture will turn to producing LCD TVs and other flat-panel displays. Sony plans to spend 300 billion yen to restructure its electronics and other business units, aiming to improve its consolidated operating profit margin to 10% from 4% currently by fiscal year 2006 (ending March 31, 2007).
Taiwan broadband network equipment vendors on bumpy road
Some Taiwanese broadband network equipment makers have recently been forced to lower their financial forecasts for 2003 due to lackluster performance in the first three quarters of this year. Askey Computer was the first among Taiwan's top five cable and ADSL modem makers to lower its 2003 financial forecasts, after the company reported its revenues declined 2.6% to NT$11.44 billion in the first three quarters of this year. Askey cut its full-year forecast for revenues to NT$16.08 billion from NT$16.66 billion, pre-tax profits to NT$341 million from NT$536 million and net profits to NT$388 million from NT$633 million. For the year, Askey expects a pre-tax EPS of NT$0.88 and after-tax EPS of NT$1 (due to investment tax refunds). Sources at Askey said that the company's broadband and WLAN equipment shipments in the first three quarters of this year actually rose over 50% from the same period last year, but fierce competition in the global market has cut its gross margins. Askey's overhead also was high in the first three quarters as the company was migrating its production lines to China, affecting its total output. With its plant in China scheduled to come online by year-end, the company expects to reduce its overhead by 10% in 2004.
TurboComm Technology, another first-tier manufacturer, has also cut its 2003 revenue forecast, to NT$4.36 billion from its previous prediction of NT$5.93 billion, due to a delay in introducing new cable modems, company sources said. The company said its pre-tax losses for 2003 will come to NT$646 million, much worse than the NT$28 million it earlier forecast. The new forecast is equivalent to a pre-tax loss of NT$4.40 per share. The revision came after TurboComm reported its September revenues slid 73.6% from a year earlier to NT$182 million. For the first nine months of the year, its revenues fell 29.8% year-on-year to NT$3.55 billion. An alleged financial scandal involving TurboComm's former chairman and a pile-up of outdated cable modems caused the sharp revenue decline, said sources.
Another first-tier broadband equipment vendor, Ambit Microsystems, could face tough times in the fourth quarter as one of its major clients, Yahoo!BB, has demanded Ambit postpone delivery of a batch of 26Mbps ADSL modems until year-end, instead of early in the fourth quarter, said company sources. Ambit's revenues only grew 9.6% year-to-year to NT$2.46 billion in September, compared to 25.9% growth to NT$21.88 billion in the first three quarters of the year.
First-tier vendor Zyxel Communications, however, fared much better than its peers. Its revenues grew 32% year-on-year to NT$4.76 billion in the first three quarters of this year. New orders for DSLAMs (digital subscriber line access multiplexers) from Japanese and Chinese buyers contributed to the increase, company sources said.
The cut-throat competition has also forced two second-tier broadband vendors, Well Communication and Puretek Industrial, to lower their financial forecasts for the year. Well Communication cut its 2003 revenue forecast to NT$2.32 billion from an earlier forecast of NT$3.03 billion and pre-tax profit forecast to NT$21.38 million from NT$89.32 million after reporting its revenues fell 10.6% year-on-year to NT$1.64 billion in the January-September period. Puretek Industrial lowered its revenue forecast for the year to NT$1.95 billion from NT$2.36 billion and pre-tax profit forecast to NT$26 million from NT$136 million, after the company's January-September revenues contracted 28.6% to NT$1.25 billion.
Another second-tier manufacturer, DrayTek, however, has made inroads into European market with its own-brand products, and saw its revenues grow 72.1% to NT$717.34 million in the first three quarters of this year.
Notebook makers post high gains in September, see sustained growth for October
Nearly all of Taiwan's notebook makers saw sales gains in September on the previous month, with four of the companies reaching all-time highs. Many expect even stronger growth in October. Most of the companies posted healthy growth rates ranging from 14% to 65% over August, although some still suffered negative growth for the first three quarters as compared with the same period of 2002. Following the rebound in September, the companies are generally more optimistic about October revenues mainly due to shipments for the upcoming Christmas season.
Quanta Computer chalked up a hefty rise of 19.8% over preceding month and an even more spectacular rise of 106% from a year earlier. Although its notebook shipments did not hit the one million mark, orders from Hewlett-Packard (HP) and Dell helped lift the figure to 960,000 units. The company's delivery of handsets also set a new monthly record of 605,000 units. Executives expect the peak season for Christmas delivery will almost certain help pull notebooks and handsets up to over one million and 700,000 units respectively in October.
Other companies that established new monthly sales records in September included Compal Electronics, Wistron, and Mitac Technology.